(This is an old post - since this thread was made we've added support for PhoneGap
The MP3 licensing site
states that you're liable for a $2500 license if you distribute your game 5000 times (presumably meaning downloads). So I would prefer to avoid the MP3 format entirely! AAC is better quality, smaller filesize and free to use in games. So everyone should use that! (Actually, everyone should use Ogg Vorbis, but either is better than MP3.)
Edit: I went through my emails and actually got in touch with the MP3 licensing people a few months back. They seemed to say (through politi-speak) that even free games are liable for this license, based on the argument that "any use of mp3 is designed to take advantage of its ubiquity, create fans... build a reputation, etc... so there are very very few instances where our license is not required".
I couldn't believe it. That's why we don't support MP3 at all and only use AAC and OGG - it's you
lot who are liable for this $2500 license, not us, and we don't want to put anyone at risk, especially when AAC is better in every